Debt to Equity = total debt / total equity

Year 2 = 316,632/146,043 Year 1 = 282,304/138,245

= 2.17 = 2.04

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5.Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	2.4
Middle quartile	0.78
Lower quartile	0.33

6. What are some risks or concerns if this ratio is TOO LOW?

7.What are some actions that could INCREASE this ratio?

8.What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Answer rating: 100% (QA)

1 Debt to Equity ratio tells us the proportion of a companys debt compared to its equity It indicates how much of the companys operations are funded b... View the full answer